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Why the industrial IoT is more important than consumer devices — and 7 more surprising IoT trends

News Analysis
Feb 28, 20196 mins
Internet of Things

Operational intelligence vendor OSIsoft shares eight things it says will define the Internet of Things (IoT) this year, including how industrial IoT will drive the market.

Industry 4.0 / Industrial IoT / Smart Factory / robotics / automation
Credit: Metamorworks / Getty Images

Given the Internet of Things’ (IoT) perch atop the hype cycle, IoT trend-spotting has become a full-time business, not just an end-of-the-year pastime. It seems every major — and minor — IoT player is busy laying out its vision of where the technology is going. Most of them harp on the same themes, of course, from massive growth to security vulnerabilities to skills shortages.

Those are all real concerns, but Chris Nelson, vice president of engineering at operational intelligence (OT) vendor OSIsoft, shared some more unique viewpoints via email. In addition to his contention that the IoT will blur the lines between IT, which runs the customers’ systems and email, and OT, which runs the technology behind the production systems, he talked about what will drive the IoT in the next year.

Let’s take a closer look at the eight trends Nelson thinking about:

1. Industrial and commercial applications will drive the industry, not consumers

According to Nelson, that’s because businesses can monetize IoT’s benefits better. He cites energy consumption as a key example, noting that “industry consumes 54 percent of delivered energy worldwide, according to the Energy Information Agency, or more than consumers or transportation combined.” Reducing energy at an aluminum or paper plant by one or two percentage points, he says can mean millions of dollars in savings. A consumer cutting power consumption by 1 percent would save only a few dollars a month.

My take: True enough, but there are a lot more consumers than there are businesses, and overall consumer spending drives the U.S. economy. Still, Nelson has a point that relatively few big enterprise implementations could help jumpstart IoT usage, while energizing the mass consumer market can take years of expensive marketing to clarify sometimes complex and esoteric benefits. In addition, we can hope that industrial and enterprise IoT will be better equipped to deal with security concerns.

2. The edge will be far more important than people realize

“The edge is basically any place — a wind farm, a factory — where data is generated, analyzed, and largely stored locally,” Nelson said. “Wait? Isn’t that just a data center? Sort of. The difference is the Internet of Things.” His point is that most of the vast amounts of data that is machine-generated doesn’t need to go very far. “The people who want it and use it are generally in the same building,” he noted, quoting Gartner’s prediction that more than 50 percent of data will be generated and processed outside traditional data centers — on the edge — although “snapshots and summaries might go to the cloud for deep analytics.”

But Nelson wasn’t sure about what kind of edge architectures would prevail. The edge might function like an interim way station for the cloud, he noted, or we could see the emergence of “Zone” networking — edges within edges — that can conduct their own analytics and perform other tasks on a smaller, more efficient scale.

My take: It’s hard to disagree with the synergy between the IoT and “the edge,” but as the cloud architectures continue to dominate computing architectures, it seems like the architectural distinctions among the edge, the data center, and the cloud may start to fade.

3. Synthetic data will become a more urgent concern

Nelson defines synthetic data as “misleading information that makes good people do bad things.” He means things like hackers sending “synthetic” notifications to a control room to get operators to open gates on a reservoir, flooding a neighborhood. He calls it “Stuxnet goes mainstream.” He noted efforts by Lawrence Berkeley Lab and Aperio, among others, on various efforts to spot fake data.

My take: Given my work in the application monitoring space, “synthetic data” means something a bit different to me. But Nelson is right that hacked or spoofed IoT data is a currently under-appreciated risk.

4. Real-time data will grow in importance

Nelson cited IDC data that says real-time data will grow from 15 percent of digital data in 2017 to 30 percent in 2030, with a jump of 7x to 10 in total data volume. He predicts more innovation and investment in this area, “particularly in software that will let people understand what machines are saying.”

My take: There’s no question that using real-time data to drive real-time decisions will become increasingly important. Given the huge amounts of data involved, though, I would look for artificial intelligence (AI) and machine learning solutions to take the forefront in turning this data into action.

5. Smart equipment will begin to get momentum

Nelson predicted that “manufacturers will increasingly integrate real-time monitoring and diagnostics into equipment,” using Caterpillar’s CAT Connect engine-monitoring services and Flowserve’s building intelligence services into industrial pumps.

“Over the past five years,” he said, “we’ve seen the technology stack come together and several end-users conduct trials. Over the next five, we will see commercial adoption.”

My take: Again, I have no argument with this point, but building smarts into expensive, long-lasting industrial equipment carries its own risks in the fast-evolving world of IoT. Because IoT changes much faster than the useful life of the equipment, there’s a real risk of obsolescence unless vendors can create modular, upgradable, solutions.

6. Rules and business practices for data sharing will start to gel

Nelson posed an interesting question: “Let’s say an equipment provider provides ongoing monitoring on devices it sold or leased to an end user. Who owns that data? Most would say the end users, but what if the equipment provider conducted analytics on the raw data thereby creating a second set of information that’s more valuable than the first? Can data from one facility be anonymized and used to optimize benchmarks for another owned by a competitor? These are big questions, and no one has figured them out yet.

My take: Yes, yes, yes. But data ownership is a huge and thorny issue, and I am less confident that we’ll make real progress on solving it in 2019 or any time soon. I look for this to be an ongoing area of concern for years.

7. Traditional businesses will develop new business models out of IoT

Nelson cited small, rural utilities that have begun to sell broadband services by leveraging their investments for smart meters in a new way, as well as “large utilities and manufacturers study plans to commercialize their in-house IoT applications for predictive maintenance.”

My take: That’s only the tip of the iceberg for what many see as the holy grail of IoT. Sure, saving money is great, but the real opportunity is using IoT to create wholly new businesses. I think it’s still too early to know what those new ideas will be and which ones will take off.

8. IoT projects will have to hit their numbers

“Companies won’t fund open-ended projects,” Nelson said, and “they will want to see payoff in two years or less.”

My take: Not sure we’re there yet. Many enterprise and industrial IoT projects are still in the pilot stage, trying to figure out what their “numbers” should be. Until that gets settled, it seems a little premature to talk about “making” those numbers.


Fredric Paul is Editor in Chief for New Relic, Inc., and has held senior editorial positions at ReadWrite, InformationWeek, CNET, PCWorld and other publications. His opinions are his own.